CAMDEN, N.J.–(BUSINESS WIRE)–Feb. 13, 2002–Campbell Soup Company (NYSE:CPB) today reported diluted earnings per share for the second quarter ended January 27, 2002, of $.49. Excluding the costs of the previously announced Australian manufacturing reconfiguration, diluted earnings per share were $.50, down 23 percent or $.15 from the comparable period last year. This is consistent with the company’s November 14, 2001 announcement that it expected diluted earnings per share for the second quarter to be between $.48-$.52.
Net sales in the quarter increased 3 percent to $1.8 billion. The following factors drove the increase:
The base volume and mix was flat.
Price added 1 percentage point.
Promotions, now included as a reduction of net sales, subtracted 2 percentage points.
Currency exchange rates negatively impacted results by 1 percentage point.
The European dry soup and sauces acquisition, completed in the fourth quarter of fiscal year 2001, added 5 percentage points.
For the quarter, wet soup shipments compared to one year ago were down 6 percent in the U.S. and up 4 percent in international, resulting in a 3 percent worldwide decline. Net earnings for the quarter were $203 million. Excluding the impact of the Australian reconfiguration, net earnings for the quarter were $206 million, down 24 percent versus a year earlier. The lower earnings were a result of the following: lower U.S. wet soup shipments; the planned significant increase in marketing investments across the portfolio; and the continued softness in Godiva’s performance due to the events of September 11 and the weak U.S. economy. The lower earnings were partially offset by favorable short-term interest rates. Total marketing investment for the quarter was up 17 percent before the impact of currency and the European acquisition.
For the first half of fiscal year 2002, net sales increased 6 percent to $3.5 billion. The following factors drove the increase:
The base volume and mix was up 3 percent.
Promotions subtracted 2 percentage points.
The European acquisition added 5 percentage points.
For the half, wet soup shipments compared to one year ago were even for the U.S. and up 7 percent in international, resulting in a 2 percent worldwide increase. Net earnings for the first half were $374 million. Excluding the impact of the Australian reconfiguration, net earnings for the first half were $380 million, down 20 percent versus a year earlier.
Douglas R. Conant, President and Chief Executive Officer, said, “We are continuing to execute the transformation plan we launched last July. We are making strategic investments in consumer marketing, product quality, innovation, infrastructure and our people to put Campbell back on a sustainable growth track.
“However, in our largest business, U.S. soup, strong shipments in the first quarter driven by planned marketing investments and a modest increase in pantry stock following September 11, have been offset in the second quarter by lower shipments, linked principally to warm weather and the unwinding of the first quarter build in pantry stock. More specifically, while our ready-to-serve brands such as `Campbell’s Chunky’ and `Campbell’s Select’ continued to exhibit positive momentum, our condensed soups had a much weaker quarter. Although we are not satisfied with this performance, we are confident that as our transformation plan unfolds, we will revitalize this important franchise.
“Beyond U.S. soup, several businesses including Pepperidge Farm, Arnotts and U.S. `Prego’ and `Pace’ sauce businesses have delivered positive sales performances this year. We are continuing to lay the groundwork across the entire portfolio to realize the full potential of our businesses.”
For the fiscal year, the company is maintaining its previous earnings estimate of approximately $1.30 per share, excluding the impact of the Australian reconfiguration. For the fiscal year 2002 third quarter, the company expects diluted earnings per share to be between $.21-$.24, excluding the impact of the Australian reconfiguration.
In addition, the company reported:
Free cash flow for the first half was $430 million versus $682 million a year ago reflecting the increased marketing investment and recovery of working capital levels from a historical low as of July 29, 2001.
Debt of $3.8 billion increased from $3.2 billion a year ago, but was down from $4 billion at the end of fiscal year 2001. The debt level was significantly impacted by the European acquisition that closed in the fourth quarter of fiscal year 2001.
A summary of fiscal year 2002 second quarter results by segment follows:
North America Soup and Away From Home
Sales for the quarter decreased 5 percent or $40 million to $812 million due to a 6 percent decrease in U.S. soup shipments. Operating earnings were $216 million, down 27 percent, resulting from lower volumes in condensed soup and the company’s previously announced plans to significantly increase marketing investments.
For the quarter, shipments of condensed soup decreased 13 percent, shipments of ready-to-serve soup increased 1 percent and shipments of “Swanson” broth increased 3 percent.
For the half, shipments of condensed soup decreased 7 percent, shipments of ready-to-serve soup increased 9 percent and shipments of “Swanson” broth increased 5 percent. Quality improvements in “Campbell’s Chunky” and “Campbell’s Select” soups helped lead the ready-to-serve increases.
For the quarter, shipments of eating soups decreased 8 percent and shipments of cooking soups decreased 5 percent.
For the half, shipments of both eating and cooking soups declined less than 1 percent.
Canada had strong sales results for the quarter and the first half.
North America Sauces and Beverages
Sales for the quarter increased 2 percent to $319 million. Operating earnings decreased 27 percent to $65 million. The earnings decline was driven by a planned increase in marketing for “Prego” Italian sauces, “Pace” Mexican sauces and “V8” vegetable juice.
Shipments of “Prego” Italian sauces increased, led primarily by the new “Prego” pasta bake sauce, a convenient product that does not require pasta to be pre-cooked.
Shipments of “Pace” Mexican sauces increased as a result of strong promotional support with sampling and coupons and increased television and radio advertising.
Shipments of “Franco-American” canned pastas decreased as a result of competitive trade promotion programs.
Shipments of “V8” vegetable juice increased as a result of the first television advertising in three years. Shipments of “V8 Splash” juice beverages declined.
Biscuits and Confectionery
Biscuits and Confectionery sales for the quarter increased 1 percent to $428 million. Excluding the impact of currency, sales increased 2 percent. Volume growth at Arnotts and Pepperidge Farm was offset by lower sales at Godiva, principally in North America. Operating earnings declined 10 percent to $80 million, excluding the impact of the Australian manufacturing reconfiguration. Excluding the impact of currency, operating earnings declined 8 percent. This decrease resulted from a planned increase in marketing investments and the decline in sales and earnings at Godiva.
Pepperidge Farm delivered solid sales performance across its portfolio with increased shipments and share growth in all strategic categories — cookies, crackers, breads and frozen products. New products, including “Giant Goldfish” sandwich crackers and “Dessert Bliss” cookies performed well. “Farmhouse” breads delivered a positive performance and new varieties of “Pepperidge Farm” Texas toast helped increase frozen product sales. Total sales of “Goldfish” products were up, led by “Giant Goldfish” crackers and the new “Goldfish” sandwich crackers.
Godiva Chocolatier’s sales and earnings were negatively impacted by weaknesses in the U.S. economy and the events of September 11, which reduced sales at retail outlets such as airport duty-free stores and resort-destination stores.
Arnotts in Australia reported increased sales driven by new “Rix” rice chips and “Rice Shapes,” as well as new premium “Emporio” biscuits.
International Soup and Sauces
International Soup and Sauces sales for the quarter increased by 53 percent to $251 million compared to $164 million a year ago. Operating earnings increased by 47 percent to $28 million compared to $19 million a year ago. These results were principally driven by the European acquisition. Excluding the impact of the European acquisition and currency, sales decreased 3 percent and operating earnings declined 31 percent as a result of planned increases in marketing investments to drive long-term growth.
In Europe, base sales were down slightly versus a year earlier. Sales softness in the United Kingdom across soup and sauces was partially offset by growth of “Liebig” soups in France. On the innovation front, full distribution in France of “Liebig DeliSoup” for children was achieved and the new “Homepride” stir fry sauces in the United Kingdom performed well. The newly acquired European dry soup and sauces business is meeting expectations despite some initially weak marketplace performance.
In Asia Pacific, progress continues to be made on the soup and broths business in Australia as consumer purchases of “Campbell’s” soups outperformed the category.
Reporting Changes
The company adopted the Emerging Issues Task Force (EITF) consensus on Issue No. 00-10 “Accounting for Shipping and Handling Fees and Costs” in the fourth quarter of fiscal year 2001. In the first quarter of fiscal year 2002, the company adopted EITF Issues No. 00-14 and 00-25, which address the measurement and income statement classification of certain consumer and trade sales promotion expenses such as coupon redemption costs, cooperative advertising programs and in-store display incentives. As a result, the following reclassifications were made to the second quarter and first half of fiscal year 2001 financial statements:
Net sales were reduced by $202 million and $399 million respectively.
Cost of products sold increased by $56 million and $105 million respectively.
Selling, general and administrative expenses were reduced by $258 million and $504 million respectively.
Conference Call
The company will host a conference call to discuss these results on February 13, 2002 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-800-857-9600 and non-U.S. participants at 630-395-0025. Participants should call at least five minutes prior to the starting time. The passcode is Campbell Soup. The conference leader is Len Griehs. The call will also be broadcast live over the Internet at https://www.campbellsoup.com and can be accessed by clicking on the “News” banner. A recording of the call will be available approximately two hours after it is completed through midnight February 18, 2002 at 1-800-964-4586 for U.S. callers or 1-402-998-0980 for non-U.S. participants.
Forward-Looking Statements
This release contains “forward-looking statements” which reflect the company’s current expectations about its future performance. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company’s most recent Form 10-K and subsequent filings for a further discussion of these risks and uncertainties. The company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.
About Campbell Soup Company
Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverage, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include “Campbell’s” soups worldwide, “Erasco” soups in Germany and “Liebig” soups in France, “Pepperidge Farm” cookies and crackers, “V8” vegetable juices, “V8 Splash” juice beverages, “Pace” Mexican sauces, “Prego” Italian sauces, “Franco-American” canned pastas and gravies, “Swanson” broths, “Homepride” sauces in the United Kingdom, “Arnott’s” biscuits in Australia and “Godiva” chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the “Batchelors,” “Oxo,” “Lesieur,” “Royco,” “Liebig,” “Heisse Tasse,” “Bla Band” and “McDonnells” brands. The company is ably supported by approximately 24,000 employees worldwide. For more information on the company, visit Campbell’s website on the Internet at www.campbellsoup.com.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) THREE MONTHS ENDED ------------------ January January 27, 2002 28, 2001 --------- --------- Net sales $ 1,810 $ 1,755 --------- --------- Costs and expenses Cost of products sold 1,004 918 Selling, general and administrative expenses 453 377 Restructuring charge 1 - --------- --------- Total costs and expenses 1,458 1,295 --------- --------- Earnings before interest and taxes 352 460 Interest, net 45 49 --------- --------- Earnings before taxes 307 411 Taxes on earnings 104 140 --------- --------- Net earnings $ 203 $ 271 ========= ========= Per share - basic Net earnings $ 0.49 $ 0.65 ========= ========= Dividends $ .1575 $ .225 ========= ========= Weighted average shares outstanding - basic 410 415 ========= ========= Per share - assuming dilution Net earnings $ 0.49 $ 0.65 ========= ========= Weighted average shares outstanding - assuming dilution 411 419 ========= ========= In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the three month period ended January 28, 2001, statement of earnings: Net sales were reduced by $202; Cost of products sold was increased by $56; and Selling, general and administrative expenses were reduced by $258. CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) SIX MONTHS ENDED ---------------- January January 27, 2002 28, 2001 -------- -------- Net sales $ 3,539 $ 3,336 -------- -------- Costs and expenses Cost of products sold 1,975 1,774 Selling, general and administrative expenses 897 739 Restructuring charge 1 - -------- -------- Total costs and expenses 2,873 2,513 -------- -------- Earnings before interest and taxes 666 823 Interest, net 98 101 -------- -------- Earnings before taxes 568 722 Taxes on earnings 194 247 -------- -------- Net earnings $ 374 $ 475 ======== ======== Per share - basic Net earnings $ 0.91 $ 1.14 ======== ======== Dividends $ .315 $ .450 ======== ======== Weighted average shares outstanding - basic 410 418 ======== ======== Per share - assuming dilution Net earnings $ 0.91 $ 1.12 ======== ======== Weighted average shares outstanding - assuming dilution 411 425 ======== ======== In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the six month period ended January 28, 2001, statement of earnings: Net sales were reduced by $399; Cost of products sold was increased by $105; and Selling, general and administrative expenses were reduced by $504. CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) THREE MONTHS ENDED ------------------ January January Percent Sales 27, 2002 28, 2001 Change ----- -------- -------- ------- Contributions: North America Soup and Away From Home $ 812 $ 852 -5% North America Sauces and Beverages 319 314 2% Biscuits and Confectionery 428 425 1% International Soup and Sauces 251 164 53% ------- ------- Total sales $ 1,810 $ 1,755 3% ======= ======= Percent Change Excluding Special Earnings Charges (1) -------- ----------- Contributions: North America Soup and Away From Home $ 216 $ 294 -27% -27% North America Sauces and Beverages 65 89 -27% -27% Biscuits and Confectionery 76 89 -15% -10% International Soup and Sauces 28 19 47% 47% ------- ------- Total operating earnings 385 491 -22% -21% Unallocated corporate expenses (33) (31) ------- ------- Earnings before interest and taxes 352 460 -23% -23% Interest, net (45) (49) Taxes on earnings (104) (140) ------- ------- Net earnings $ 203 $ 271 -25% -24% ======= ======= Net earnings per share - assuming dilution $ .49 $ .65 -25% -23% ======= ======= In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the three month period ended January 28, 2001, statement of earnings: Net sales were reduced by $202; Cost of products sold was increased by $56; and Selling, general and administrative expenses were reduced by $258. (1) Percent change is calculated excluding the effects of the Australian manufacturing reconfiguration plan announced in fiscal 2001. CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) SIX MONTHS ENDED ---------------- January January Percent 27, 2002 28, 2001 Change -------- -------- -------- Sales ----- Contributions: North America Soup and Away From Home $1,618 $1,626 0% North America Sauces and Beverages 632 613 3% Biscuits and Confectionery 807 792 2% International Soup and Sauces 482 305 58% ------ ------ Total sales $3,539 $3,336 6% ====== ====== Percent Change Excluding Special Charges (1) Earnings ----------- -------- Contributions: North America Soup and Away From Home $ 445 $ 552 -19% -19% North America Sauces and Beverages 124 161 -23% -23% Biscuits and Confectionery 110 134 -18% -12% International Soup and Sauces 51 33 55% 55% ------ ------ Total operating earnings 730 880 -17% -16% Unallocated corporate expenses (64) (57) ------ ------ Earnings before interest and taxes 666 823 -19% -18% Interest, net (98) (101) Taxes on earnings (194) (247) ------ ------ Net earnings $ 374 $ 475 -21% -20% ====== ====== Net earnings per share - assuming dilution $ 0.91 $ 1.12 -19% -18% ====== ====== In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the six month period ended January 28, 2001, statement of earnings: Net sales were reduced by $399; Cost of products sold was increased by $105; and Selling, general and administrative expenses were reduced by $504. (1) Percent change is calculated excluding the effects of the Australian manufacturing reconfiguration plan announced in fiscal 2001. CAMPBELL SOUP COMPANY CONSOLIDATED BALANCE SHEETS (unaudited) (millions) January January 27, 2002 28, 2001 -------- -------- Current assets $ 1,438 $ 1,229 Plant assets, net 1,586 1,570 Intangible assets, net 2,408 1,704 Other assets 617 591 -------- -------- Total assets $ 6,049 $ 5,094 ======== ======== Current liabilities $ 2,888 $ 2,732 Long-term debt 2,354 1,742 Nonpension postretirement benefits 330 350 Other liabilities 481 461 Shareowners' equity (4) (191) -------- -------- Total liabilities and shareowners' equity $ 6,049 $ 5,094 ======== ======== Total debt $ 3,810 $ 3,175 ======== ======== Net debt $ 3,778 $ 3,137 ======== ========